" MANHATTAN (CN) - With obvious relish, a federal judge held an SEC attorney's feet to the fire for proposing a settlement with Citigroup that represents a fraction of an alleged $600 million mortgage fraud and does not require the bank to admit wrongdoing. Citigroup sold $1 billion in mortgage-backed CDOs, which a Citigroup trader called "a collection of dogsh!t," while secretly shorting the securities.
SEC attorney Matthew Martens urged U.S. District Judge Jed Rakoff not to factor the public interest into his decision on whether to approve the deal."
Over a year ago I asked a fairly simple question, why can’t we fire failed regulators? After all, lots of seemingly smart people had oversight of our financial markets, and regardless of whatever spin you might hear, our financial markets are, and have been, highly regulated. Sadly “highly” is that the same as “well”.
Perhaps no failure was as avoidable as that of the Bernie Madoff scheme. After all outside parties basically put the case together and brought it to the Securities and Exchange Commission (SEC). Yet the SEC did nothing until it was far too late. Eventually the SEC’s human resources department and an outside law firm advised the agency on how to handle these regulatory failures. Their recommendation: fire the manager responsible. SEC Chair Mary Schapiro’s response? No, as such “would harm the agency’s work.”
